Reliance-ADAG among 10 suitors for MGM: Wall Street Journal

Washington, Jan 23 (IANS) Hollywood’s famous film studio Metro-Goldwyn-Mayer (MGM) has received buyout bids from several potential suitors, including India’s Reliance ADA Group (ADAG), according to the Wall Street Journal. Bids ranged between $1.5 billion and $2.5 billion, but the offers aren’t close to covering the $3.7 billion that is owed to lenders, the leading US financial daily said Friday citing people with knowledge of the situation.

MGM has now begun to explore how it could stage a streamlined “prepackaged” bankruptcy as part of the auction, it said.

In all, MGM received interest from more than 10 suitors. Besides Reliance-ADAG, they included Time Warner Inc., Lions Gate Entertainment, Summit Entertainment, Liberty Media Corp and News Corp, owner of the Wall Street Journal.

The studio is owned by a group, including private equity firms Providence Equity Partners and TPG Inc. and media companies Sony Corp. and Comcast Corp, which acquired the studio in a $5 billion deal that closed in 2005.

Under almost any sale scenario, MGM will need approval from all its lenders, a threshold that could prove difficult to achieve, the Journal said. The studio’s lending group, led by J.P. Morgan Chase and Co, includes some 140 investors, many of them hedge funds.

The Journal cited a person close to the negotiations as saying the studio remains operational with several films in the pipeline, including “Hot Tub Time Machine,” which hits theatres in March and “Zookeeper,” currently in post-production.

MGM, which owns a 4,000-title movie library including the James Bond and Pink Panther franchises, has begun evaluating the bids and could start providing more information to serious contenders in the near future, it said citing people familiar with the matter.

The studio is struggling after taking on debt to pay for its 2005 leveraged buyout and a sharp slowdown in the market for DVDs with little hope of a rebound.